In these uncertain times the only certain thing is that no one really knows for sure what will happen with the property market. But let me run through a few reasons why I think student property could be the perfect safe haven in a UK property market outside the EU.
* Student numbers tend to go up when the economy is performing less well, or in a recession, not down. Official statistics show more people went to university after the 2008 financial crisis, not fewer. Much the same happened in the early 80s and 90s when the economy wasn’t that buoyant.
Young people recognise the value of qualifications in a tough jobs market more than ever. Plus, delaying entry into the jobs market for three years or so makes a lot of sense – especially if you can borrow cheaply to pay for it now and repay in (hopefully) better times.
* The UK is attracting more and more UK students – and most of these students are NOT from EU countries. 20% of international students are from China. Other than Ireland and Germany student numbers from EU countries are almost too small to measure.
Chinese students, to give just one example, will still come to the UK for our high quality education and it won’t make a jot of difference to them if we’re not in the EU. In fact, if a weaker pound makes it cheaper more of these students will probably be attracting to study in the UK.
* Student property tends to be in the cheapest areas of towns and cities. If property prices are impacted by Brexit these could become more affordable to investors than they have been for years.
Any possible reduction in interest rates could make it possible to fund a student property purchase for a percentage or two in interest. Next to nothing in other words.
* Student property has always offered higher yields than other types of letting, such as single family lets – and can be anything in the range of 10% up to 20% for a well run property. I can’t think of a single reason why not being in the EU could change this. In fact, if property prices fall while demand for student rentals increase student rental yields could actually increase.
Of course, these aren’t reasons for rushing into a student property investment without doing your due diligence. It’s important to choose to invest in locations with sought after universities, in areas/types of property where students want to live, and where there’s strong demand for your property. Do your research and take professional advice where you need it.
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